Rich people in the US, have built business empires taking on debt.
But, normal retail folks like you and me can ruin our financial well being by taking debt unnecessarily.
So it makes sense to understand the difference between good and bad debt: 👇
But, normal retail folks like you and me can ruin our financial well being by taking debt unnecessarily.
So it makes sense to understand the difference between good and bad debt: 👇
1. Robert Kiyosaki puts it well:
- Rich people build assets (Assets=put money into your pocket)
- Example: when Jared Kushner buys Real Estate, he will rent/sell it. This is a 'cash flow' for him.
- Unfortunately, when normal folks buy Real Estate, they create a liability.
- Rich people build assets (Assets=put money into your pocket)
- Example: when Jared Kushner buys Real Estate, he will rent/sell it. This is a 'cash flow' for him.
- Unfortunately, when normal folks buy Real Estate, they create a liability.
2. Normal folks are champions at creating liabilities:
- Eg. buy an i-phone on EMI.
- Buy a house on a massive loan.
- If you max out 1 credit card, time to apply for a new one.
With endless WANTS, Discounts/Cash-backs/EMIs become tools to push demand.
- Eg. buy an i-phone on EMI.
- Buy a house on a massive loan.
- If you max out 1 credit card, time to apply for a new one.
With endless WANTS, Discounts/Cash-backs/EMIs become tools to push demand.
3. Rich folks are champions at building assets: they take debt, create an asset (eg. a Real Estate company) and take tax breaks on it.
More over, they build a brand around it (example Trump is a brand, which one could argue is pretty much built on debt).
More over, they build a brand around it (example Trump is a brand, which one could argue is pretty much built on debt).
4. Great marketing makes us believe that DEBT is necessary.
Example:
- You don't need a credit card to boost up your CIBIL.
- If you are someone with a good credit history, your CIBIL will be high.
- But almost every research is done by lending firms: eg
Example:
- You don't need a credit card to boost up your CIBIL.
- If you are someone with a good credit history, your CIBIL will be high.
- But almost every research is done by lending firms: eg
5. Summary: to get rich, we need to develop the right mindset.
This involves understanding why you NEED debt in the first place?
And, it is definitely not to buy a new shiny phone (if that is a liability).
So how would you define good debt? (Comment below)
This involves understanding why you NEED debt in the first place?
And, it is definitely not to buy a new shiny phone (if that is a liability).
So how would you define good debt? (Comment below)
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